Isle of Capri Casinos, Inc. Announces Fiscal 2014 Third Quarter Results - KSLA News 12 Shreveport, Louisiana News Weather & Sports

Isle of Capri Casinos, Inc. Announces Fiscal 2014 Third Quarter Results

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SOURCE Isle of Capri Casinos, Inc.

ST. LOUIS, Feb. 27, 2014 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the third quarter of fiscal year 2014 ended January 26, 2014 and other Company-related news.

Consolidated Financial Results

The following table outlines the Company's financial results (dollars in millions, except per share data, unaudited):


Three Months Ended


Nine Months Ended


January 26,


January 27,


January 26,


January 27,


2014


2013


2014


2013

Net revenues

$        224.2


$         228.0


$         693.8


$         666.0

Consolidated Adjusted EBITDA (1)

37.0


39.9


116.2


119.4









Income (loss) from continuing operations

9.4


(2.5)


10.0


(5.2)

Income (loss) from discontinued operations

1.3


0.3


3.8


3.0

Net income (loss)

10.7


(2.2)


13.8


(2.2)

Diluted income (loss) per share from continuing operations

0.24


(0.06)


0.25


(0.13)

Diluted income per share from discontinued operations

0.03


-


0.10


0.07

Diluted income (loss) per share

0.27


(0.06)


0.35


(0.06)



(1)

For a further description of Consolidated Adjusted EBITDA, refer to the reconciliation tables following the narrative and the definition of Adjusted EBITDA in footnote (1) of this release.

Virginia McDowell, the Company's president and chief executive officer, commented, "We continue to improve the efficiency of our operations despite the ongoing impact of sluggish consumer spending and the severe winter weather conditions we experienced during the quarter.  We increased Adjusted EBITDA at four of our properties and improved Adjusted EBITDA margins at seven of our properties, leading to overall margin growth across the portfolio of properties open for more than one year."

Diluted income (loss) per share from continuing operations for the quarter was $0.24 compared to ($0.06) for the third quarter last year.  Income from continuing operations for the quarter ended January 26, 2014 was impacted by the reversal of a $2.0 million litigation accrual due to a recent favorable court ruling, and the $12.0 million reversal of a previously recorded tax valuation allowance, as a result of the recent sale of our Davenport property.  The Loss from continuing operations for the prior year quarter were impacted by preopening expense of $1.0 million related to our Nemacolin and Cape Girardeau properties.  Excluding these items, Adjusted earnings per share from continuing operations would have been a loss of ($0.12) for the fiscal 2014 quarter, compared to a loss of ($0.04) for the prior year quarter.

McDowell continued, "The impacts of the weather and continuing revenue pressure, particularly at the lower end of our customer database, were at least partially offset by our ongoing and aggressive efforts to control costs and right-size our operating structure to our business volumes. The success of our profit improvement initiatives led directly to the improvement in same store Adjusted EBITDA margins.  We estimate these initiatives contributed approximately $2 million to Adjusted EBITDA during the quarter. We continue to believe that the profit improvement initiatives will result in annual savings of $10 million, when fully implemented.

"A few weeks ago we completed the sale of our property in Davenport and received approximately $50 million in net proceeds. We have initially used the proceeds to reduce borrowings under our senior credit facility. 

"Furthermore, we completed the suitability hearing with our partner Tower Entertainment before the Pennsylvania Gaming Control Board in January. We are hopeful that The Provence, a unique proposal for a casino-anchored urban entertainment complex in Philadelphia, will be chosen by the Board for the remaining gaming license in Pennsylvania."

Operating Results

Black Hawk – Our profit improvement efforts lead to an increase in Adjusted EBITDA from $6.0 million to $6.9 million at our two casinos in Black Hawk while operating margins increased to 24.3%, despite a decrease in net revenues of $0.5 million to $28.4 million.  While weather conditions impacted the Black Hawk gaming market, we were successful in growing market share during the period.

Pompano – Net revenues increased 6.3% to $42.4 million, Adjusted EBITDA increased 23.1% to $9.1 million at Pompano Park, and operating margins increased 300 basis points to 21.6%.   Growth was driven by a combination of focused marketing efforts resulting in increased slot play and disciplined cost control. 

Iowa – Net revenues decreased 7.4% to $41.4 million, consistent with the markets in which we operate.  In Waterloo and Marquette we were able to absorb the revenue decrease through operating efficiencies resulting in Adjusted EBITDA which was flat with the prior year, while Adjusted EBITDA margins increased by over 100 basis points at each property.  The decline in Iowa Adjusted EBITDA was attributable to our property in Bettendorf where we were not able to offset an 11% decrease in net revenue.

Lake Charles – Net revenues increased 2.0% to $29.9 million, and Adjusted EBITDA increased 0.5% to $3.8 million.  Market conditions were positively impacted by improved economic conditions in Louisiana and Northwest Texas, where unemployment declined during the period.

Missouri – Net revenues decreased 10.4% to $53.0 million, and Adjusted EBITDA decreased from $13.9 million to $12.9 million at our properties in Missouri, collectively.  The third fiscal quarter was the first period reflecting year-over-year results for our property in Cape Girardeau.  Despite a net revenue decrease of $3.0 million collectively at our properties in Boonville, Caruthersville and Kansas City, Adjusted EBITDA only decreased $0.1 million year-over-year and Adjusted EBITDA margins increased at each property, including increases of 176 basis points in Boonville to 35.7% and 181 basis points to 23.5% in Kansas City. 

We continue to refine our business model in Cape Girardeau, where comparative net revenues decreased $3.2 million and Adjusted EBITDA decreased $0.9 million compared to the prior year third quarter, its first quarter of operations.

Mississippi – Net revenues decreased from $25.9 million to $22.9 million and Adjusted EBITDA decreased from $3.9 million to $2.1 million.   Our properties in Mississippi continued to face competitive pressures during the period.

Pennsylvania – Net revenues were $6.1 million and Adjusted EBITDA was ($1.6) million.  This is the first year of operation for Lady Luck Casino at Nemacolin Woodlands Resort. We continue to identify opportunities for cost savings in order to better match our operating expenses to revenue levels throughout the seasonal low period.  We are also continuing to aggressively market the property in order to grow our database of customers.

Corporate Expenses

Corporate and development expenses were $7.2 million for the quarter, a decrease of $0.3 million compared to the prior year.

Non-cash stock compensation expense was $0.8 million for the quarter compared to $1.1 million in the third quarter of fiscal 2013.

Development

The Provence, Philadelphia, Pennsylvania – We are partnered with Tower Entertainment, LLC, to operate the proposed $700 million casino entertainment complex, dubbed The Provence, if selected for licensure by the Pennsylvania Gaming Control Board.  As proposed the 1.25 million square foot project is expected to include a 125-room hotel, a casino featuring approximately 3,300 electronic gaming machines and 150 table games, as well as a wide variety of non-gaming entertainment amenities.  The Pennsylvania Gaming Control Board has previously indicated that they currently expect to announce a decision with respect to the license in April of this year.  More information about the project is available at www.theprovencecasino.com.

Capital Structure, Capital Expenditures and Updated Guidance

As of January 26, 2014, the Company had:

  • $68.4 million in cash and cash equivalents, excluding $9.8 million in restricted cash and investments;
  • $1.1 billion in total debt; and
  • $120 million in net line of credit availability.

Third quarter capital expenditures were $2.2 million, bringing total capital expenditures to $32.9 million for the first nine months of fiscal 2014.  The Company expects to incur approximately $6 million to $8 million in capital expenditures for the balance of fiscal 2014.

As a result of the impact of the recent sale of our Davenport casino, the favorable litigation reversals and other events, the Company updated its previously issued guidance for the following non-operating items for fiscal 2014:

  • Interest expense is expected to be approximately $82 million ($22 million in the fourth quarter).
  • Depreciation and amortization expense is expected to be approximately $81 million ($21 million in the fourth quarter).

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Thursday, February 27, 2014 at 10:00 am central time during which management will discuss the financial and other matters addressed in this press release.  The conference call can be accessed by interested parties via webcast through the investor relations page of the Company's website, www.islecorp.com, or, for domestic callers, by dialing 877-870-4263.  International callers can access the conference call by dialing 412-317-0790.  The conference call will be recorded and available for review starting at 11:59 pm central on Thursday, February 27, 2014, until 11:59 pm central on Thursday, March 6, 2014, by dialing 877-344-7529; International: 412-317-0088 and access number 10041585.

About Isle of Capri Casinos, Inc.

Isle of Capri Casinos, Inc. is a leading regional gaming and entertainment company dedicated to providing guests with exceptional experience at each of the casino properties that it owns and operates, primarily under the Isle and Lady Luck brands.  The Company currently owns and operates 15 gaming and entertainment facilities in Mississippi, Louisiana, Iowa, Missouri, Colorado, Pennsylvania and Florida. More information is available at the Company's website, www.islecorp.com.

Forward-Looking Statements

This press release may be deemed to contain forward-looking statements, which are subject to change. These forward-looking statements may be significantly impacted, either positively or negatively by various factors, including without limitation, licensing, and other regulatory approvals, financing sources, development and construction activities, costs and delays, weather, permits, competition and business conditions in the gaming industry. The forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements herein.

Additional information concerning potential factors that could affect the Company's financial condition, results of operations and expansion projects, is included in the filings of the Company with the Securities and Exchange Commission, including, but not limited to, its Form 10-K for the most recently ended fiscal year.

Contacts
Isle of Capri Casinos, Inc.,
Dale Black, Chief Financial Officer-314.813.9327
Jill Alexander, Senior Director of Corporate Communication-314.813.9368
http://www.islecorp.com

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)









Three Months Ended


Nine Months Ended




January 26,


January 27,


January 26,


January 27,




2014


2013


2014


2013


Revenues:










Casino


$      235,843


$      236,727


$      733,185


$      696,583


Rooms


6,933


6,830


24,560


23,788


Food, beverage, pari-mutuel and other


32,404


31,571


99,123


92,054


Gross revenues


275,180


275,128


856,868


812,425


Less promotional allowances


(50,990)


(47,111)


(163,044)


(146,414)


Net revenues


224,190


228,017


693,824


666,011


Operating expenses:










Casino


38,354


37,644


118,414


109,809


Gaming taxes


60,324


59,888


185,454


172,988


Rooms


1,448


1,398


5,221


4,934


Food, beverage, pari-mutuel and other


10,608


10,700


31,724


29,398


Marine and facilities


13,967


13,477


42,969


40,161


Marketing and administrative


56,120


58,690


175,010


168,140


Corporate and development


7,230


7,506


21,314


26,757


Litigation accrual reversals


(1,979)


-


(9,330)


-


Preopening expense


-


978


3,898


4,319


Depreciation and amortization


20,171


18,805


60,495


51,402


Total operating expenses


206,243


209,086


635,169


607,908


Operating income


17,947


18,931


58,655


58,103












Interest expense


(21,910)


(22,005)


(59,758)


(64,414)


Interest income


84


100


260


406


Derivative income


-


222


398


532


Loss from continuing operations before income taxes











(3,879)


(2,752)


(445)


(5,373)


Income tax benefit


13,270


302


10,499


166


Income (loss) from continuing operations 


9,391


(2,450)


10,054


(5,207)


Income from discontinued operations, net of income taxes

1,266


264


3,778


3,029


Net income (loss)


$        10,657


$         (2,186)


$        13,832


$         (2,178)












Income (loss) per common share-basic:










Income (loss) from continuing operations


$            0.24


$           (0.06)


$            0.25


$           (0.13)


Income from discontinued operations, net of income taxes 











0.03


-


0.10


0.07


Net income (loss)


$            0.27


$           (0.06)


$            0.35


$           (0.06)












Income (loss) per common share-dilutive:










Income (loss) from continuing operations


$            0.24


$           (0.06)


$            0.25


$           (0.13)


Income from discontinued operations, net of income taxes 











0.03


-


0.10


0.07


Net income (loss)


$            0.27


$           (0.06)


$            0.35


$           (0.06)












Weighted average basic shares


39,828,740


39,488,480


39,699,295


39,280,965


Weighted average diluted shares


39,911,715


39,488,480


39,758,965


39,280,965


 

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and per share amounts) 


January 26,


April 28,


2014


2013

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$          68,422


$          68,469

Marketable securities

25,477


25,520

Accounts receivable, net

10,115


11,077

Income taxes receivable

5,550


4,789

Deferred income taxes

2,027


1,573

Prepaid expenses and other assets

24,553


20,872

Assets held for sale

49,654


-

Total current assets

185,798


132,300

Property and equipment, net

987,968


1,034,026

Other assets:




Goodwill

242,795


280,803

Other intangible assets, net

67,377


60,748

Deferred financing costs, net

24,559


27,230

Restricted cash and investments

9,796


11,417

Prepaid deposits and other

5,015


7,075

Total assets

$     1,523,308


$     1,553,599

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current maturities of long-term debt

$               438


$               415

Accounts payable 

17,622


34,533

Accrued liabilities:




Payroll and related

34,977


35,093

Property and other taxes

20,141


21,340

Interest

20,533


18,502

Progressive jackpots and slot club awards

16,369


16,579

Other

29,686


29,337

Liabilities related to assets held for sale

1,196


-

Total current liabilities

140,962


155,799

Long-term debt, less current maturities

1,146,366


1,156,469

Deferred income taxes

33,895


43,104

Other accrued liabilities

19,393


33,303

Other long-term liabilities

22,671


22,514

Stockholders' equity:




Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued

-


-

Common stock, $.01 par value; 60,000,000 shares authorized; shares issued: 42,066,148at January 26, 2014 and April 28, 2013




421


421

Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued



-

Additional paid-in capital

246,938


246,214

Retained earnings (deficit)

(60,395)


(74,227)

Accumulated other comprehensive (loss) income

-


(247)


186,964


172,161

Treasury stock, 2,236,971 shares at January 26, 2014 and 2,470,128 at April 28, 2013

(26,943)


(29,751)

Total stockholders' equity

160,021


142,410

Total liabilities and stockholders' equity

$     1,523,308


$     1,553,599

 

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)














Three Months Ended


Nine Months Ended




January 26,


January 27,


January 26,


January 27,




2014


2013


2014


2013

Colorado










Black Hawk


$       28,364


$       28,879


$       91,071


$       90,902











Florida










Pompano


42,360


39,860


116,146


108,236











Iowa










Bettendorf


16,008


17,892


54,438


57,441


Marquette


5,063


6,003


19,086


20,716


Waterloo


20,289


20,770


62,271


63,107


Iowa Total


41,360


44,665


135,795


141,264











Louisiana










Lake Charles


29,945


29,364


94,855


92,691











Mississippi










Lula


11,602


12,587


35,704


39,990


Natchez


4,664


6,129


14,786


19,092


Vicksburg


6,632


7,167


21,446


20,622


Mississippi Total


22,898


25,883


71,936


79,704











Missouri










Boonville


17,448


18,383


55,068


58,569


Cape Girardeau


12,959


16,111


39,817


16,111


Caruthersville


6,762


7,149


21,648


23,926


Kansas City


15,837


17,513


50,844


54,045


Missouri Total


53,006


59,156


167,377


152,651











Pennsylvania










Nemacolin


6,080


-


16,102


-











Property Net Revenues before Other


224,013


227,807


693,282


665,448

Other


177


210


542


563

Net Revenues from Continuing Operations

$     224,190


$     228,017


$     693,824


$     666,011

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)
















Three Months Ended January 26, 2014




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado


$           4,515


$           2,366


$                    8


$             -


$   6,889













Pompano, Florida


7,389


1,749


6


-


9,144













Bettendorf


1,850


1,555


3


-


3,408

Marquette


272


458


1


-


731

Waterloo


4,849


1,186


4


-


6,039


Iowa Total


6,971


3,199


8


-


10,178













Lake Charles, Louisiana


822


2,939


4


-


3,765













Lula


232


1,298


3


-


1,533

Natchez


(665)


314


4


-


(347)

Vicksburg


(21)


899


4


-


882


Mississippi Total


(454)


2,511


11


-


2,068













Boonville


5,193


1,034


6


-


6,233

Cape Girardeau


(828)


2,786


1


-


1,959

Caruthersville


200


720


4


-


924

Kansas City


2,800


924


4


-


3,728


Missouri Total


7,365


5,464


15


-


12,844













Nemacolin, Pennsylvania


(3,202)


1,558


1


-


(1,643)













Total Operating Properties

23,406


19,786


53


-


43,245

Corporate and Other


(5,459)


385


838


(1,979)


(6,215)

Total


$         17,947


$         20,171


$                891


$      (1,979)


$ 37,030
















Three Months Ended January 27, 2013




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado


$           3,823


$           2,176


$                    8


$             -


$   6,007













Pompano, Florida


5,595


1,829


7


-


7,431













Bettendorf


2,676


1,728


4


-


4,408

Marquette


309


469


2


-


780

Waterloo


4,785


1,175


5


-


5,965


Iowa Total


7,770


3,372


11


-


11,153













Lake Charles, Louisiana


1,147


2,591


8


-


3,746













Lula


882


1,355


4


-


2,241

Natchez


208


359


4


-


571

Vicksburg


(41)


1,078


5


-


1,042


Mississippi Total


1,049


2,792


13


-


3,854













Boonville


5,341


896


6


-


6,243

Cape Girardeau


(616)


2,762


6


708


2,860

Caruthersville


140


830


6


-


976

Kansas City


2,800


1,001


4


-


3,805


Missouri Total


7,665


5,489


22


708


13,884













Nemacolin, Pennsylvania


(270)


-


-


270


-













Total Operating Properties

26,779


18,249


69


978


46,075

Corporate and Other


(7,848)


556


1,097


-


(6,195)

Total


$         18,931


$         18,805


$             1,166


$          978


$ 39,880

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)
















Nine Months Ended January 26, 2014




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado

$         15,131


$                 7,041


$                  27


$             -


$   22,199













Pompano, Florida


15,283


5,383


19


-


20,685













Bettendorf


8,339


4,933


10


-


13,282

Marquette


2,734


1,423


5


-


4,162

Waterloo


14,707


3,608


14


-


18,329


Iowa Total


25,780


9,964


29


-


35,773













Lake Charles, Louisiana

5,016


8,819


13


-


13,848













Lula


408


3,946


11


-


4,365

Natchez


(2,000)


1,007


13


-


(980)

Vicksburg


249


2,795


13


-


3,057


Mississippi Total

(1,343)


7,748


37


-


6,442













Boonville


16,180


3,097


18


-


19,295

Cape Girardeau


(2,738)


8,361


5


-


5,628

Caruthersville


982


2,267


14


-


3,263

Kansas City


8,200


2,861


12


-


11,073


Missouri Total


22,624


16,586


49


-


39,259













Nemacolin, Pennsylvania

(11,226)


3,785


2


3,898


(3,541)













Total Operating Properties

71,265


59,326


176


3,898


134,665

Corporate and Other


(12,610)


1,169


3,343


(10,349)


(18,447)

Total


$         58,655


$               60,495


$             3,519


$      (6,451)


$ 116,218
















Nine Months Ended January 27, 2013




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado

$         14,666


$                 6,534


$                  32


$             -


$   21,232













Pompano, Florida


11,415


5,406


21


-


16,842













Bettendorf


9,784


5,211


13


-


15,008

Marquette


2,740


1,345


12


-


4,097

Waterloo


14,917


3,832


16


-


18,765


Iowa Total


27,441


10,388


41


-


37,870













Lake Charles, Louisiana

6,377


7,013


14


-


13,404













Lula


1,186


4,780


15


-


5,981

Natchez


1,169


1,186


14


-


2,369

Vicksburg


(306)


3,340


14


-


3,048


Mississippi Total

2,049


9,306


43


-


11,398













Boonville


17,753


2,649


17


-


20,419

Cape Girardeau


(3,957)


2,762


6


4,049


2,860

Caruthersville


1,556


2,521


16


-


4,093

Kansas City


9,067


3,020


10


-


12,097


Missouri Total


24,419


10,952


49


4,049


39,469













Nemacolin, Pennsylvania

(270)


-


-


270


-













Total Operating Properties

86,097


49,599


200


4,319


140,215

Corporate and Other


(27,994)


1,803


3,850


1,478


(20,863)

Total


$         58,103


$               51,402


$             4,050


$       5,797


$ 119,352

 

Isle of Capri Casinos, Inc.

Reconciliation of Income (Loss) From Continuing Operations to Adjusted EBITDA

(unaudited, in thousands)














Three Months Ended


Nine Months Ended




January 26,


January 27,


January 26,


January 27,




2014


2013


2014


2013

Income (loss) from continuing operations


$          9,391


$        (2,450)


$        10,054


$        (5,207)


Income tax benefit


(13,270)


(302)


(10,499)


(166)


Derivative income


-


(222)


(398)


(532)


Interest income


(84)


(100)


(260)


(406)


Interest expense


21,910


22,005


59,758


64,414


Depreciation and amortization


20,171


18,805


60,495


51,402


Stock-based compensation


891


1,166


3,519


4,050


Litigation accrual reversals (3)


(1,979)


-


(9,330)


-


Preopening expense


-


978


3,898


4,319


Gain on sale of airplane


-


-


(1,019)


-


Financing related


-


-


-


1,478

Adjusted EBITDA


$        37,030


$        39,880


$      116,218


$      119,352

 

Isle of Capri Casinos, Inc.

Reconciliations of GAAP Net Income (Loss) to Adjusted Income (Loss) From Continuing Operations and GAAP Net Income (Loss) Per Share to Adjusted Income (Loss) From Continuing Operations Per Share

(unaudited, in thousands)










Three Months Ended


Nine Months Ended


January 26,


January 27,


January 26,


January 27,


2014


2013


2014


2013









GAAP net income (loss) 

$      10,657


$      (2,186)


$      13,832


$      (2,178)

Tax valuation allowance reversal

(11,993)


-


(11,993)


-

Litigation accrual reversals (3)

(2,223)


-


(16,953)


-

Preopening expense

-


978


3,898


4,319

Gain on sale of corporate aircraft

-


-


(1,019)


-

Financing related

-


-


-


2,506

Discontinued operations

(1,266)


(264)


(3,778)


(3,029)

Adjusted income (loss) from continuing operations (2)

$      (4,825)


$      (1,472)


$    (16,013)


$        1,618

















GAAP net income (loss) per share

$          0.27


$        (0.06)


$          0.35


$        (0.06)

Tax valuation allowance reversal

(0.30)


-


(0.30)


-

Litigation accrual reversals (3)

(0.06)


-


(0.43)


-

Preopening expense

-


0.02


0.10


0.11

Gain on sale of corporate aircraft

-


-


(0.03)


-

Financing related

-


-


-


0.07

Discontinued operations

(0.03)


-


(0.10)


(0.08)

Adjusted income (loss) from continuing operations








per share (2)

$        (0.12)


$        (0.04)


$        (0.41)


$          0.04

 

1.

Adjusted EBITDA is "earnings before interest and other non-operating income (expense), income taxes, stock-based compensation, preopening expense, litigation accrual reversals, financing related expenses and depreciation and amortization." Adjusted EBITDA is presented solely as a supplemental disclosure because management believes that it is 1) a widely used measure of operating performance in the gaming industry, 2) used as a component of calculating required leverage and minimum interest coverage ratios under our Senior Credit Facility and 3) a principal basis of valuing gaming companies. Management uses Adjusted EBITDA as the primary measure of the Company's operating properties' performance, and they are important components in evaluating the performance of management and other operating personnel in the determination of certain components of employee compensation.  Adjusted EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to any other measure determined in accordance with U.S. generally accepted accounting principles (GAAP).  The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in Adjusted EBITDA.  Also, other gaming companies that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner than the Company.  A reconciliation of Adjusted EBITDA to income (loss) from continuing operations is included in the financial schedules accompanying this release.




Certain of our debt agreements use a similar calculation of "Adjusted EBITDA" as a financial measure for the calculation of financial debt covenants and includes add back of items such as gain on early extinguishment of debt, pre-opening expenses, certain write-offs and valuation expenses, and non-cash stock compensation expense. Reference can be made to the definition of Adjusted EBITDA in the applicable debt agreements on file as Exhibits to our filings with the Securities and Exchange Commission.  



2.

Adjusted income (loss) from continuing operations is presented solely as a supplemental disclosure as this is one method management reviews and utilizes to analyze the performance of its core operating business.  For many of the same reasons mentioned above related to Adjusted EBITDA, management believes Adjusted income (loss) from continuing operations and Adjusted income (loss) from continuing operations per share are useful analytic tools as they enable management to track the performance of its core casino operating business separate and apart from factors that do not impact decisions affecting its operating casino properties, such as litigation accrual reversals or preopening expenses.  Management believes Adjusted income (loss) from continuing operations and Adjusted income (loss) from continuing operations per share are useful to investors since these adjustments provide a measure of financial performance  that more closely resembles widely used measures of performance and valuation in the gaming industry.  Adjusted income (loss) from continuing operations and adjusted income (loss) from continuing operations per share do not include tax valuation allowance reversals, litigation accrual reversals, preopening expenses, certain asset sale gains, financing related expenses, and income or loss from discontinued operations.



3.

Litigation accrual reversals for the three months ended January 26, 2014 includes a $2.0 million reduction to operating expenses and a $0.2 million reduction of interest expense.  Litigation accrual reversals for the nine months ended January 26, 2014, includes a $9.3 million reduction to operating expenses and a $7.6 million reduction of interest expense.

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